For sigma plc the weighted average cost of capital is

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Reference no: EM132055816

Weighted Average Cost of Capital

Question

The following information is available on the long term financing of Sigma plc:

£m

Ordinary shares of £1 each (15 million)                     15

7% irredeemable debentures                                     28

The current share price is 290p and the market value of debentures is £93 (per £100 nominal).

A dividend of 12 pence per share has just been paid. The expected growth rate of dividends is 6%.

The corporation tax rate 25%

Calculate the weighted average cost of capital (WACC) for Sigma plc.

Reference no: EM132055816

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